Partnership Filing Requirements: Every
partnership (general or limited) must file a return, regardless of the
amount of income or loss. If the partnership does not receive income and
does not incur any expenses, the partnership is not required to file a
return. However, the partnership is considered terminated when business or
financial operations are no longer carried on by any of its partners.
Partnership Filing Deadline: By the 15th day of
the 4th month following the close of the tax year.
Partnership Extension Deadline and Form Number: Form
8736 extends the deadline 3 months. Form 8800 extends the deadline an additional 3
months.
Partnership Magnetic Media Filing Requirement: A
partnership with 100 or more partners is generally required to use
magnetic media to file Form 1065 and related forms for tax years ending on
or after December 31, 1999 [Prop. Reg. §301.6011-3]. Partnerships that
fail to conform to the magnetic media requirements are subject to
penalties for failure to file. Electing large partnerships and
partnerships with foreign addresses will not be required to use magnetic
media for tax years beginning before January 1, 2001.
Partnership Penalties: Failure to file return:
$50 per month per partner up to 5 months. Penalty is assessed against
partnership. Exception: The penalty will not be imposed if the
partnership can show reasonable cause for late filing. Partnerships with
10 or fewer partners will usually qualify for the exception if all
partners have fully reported their shares of partnership income,
deductions, and credits on timely filed individual returns; and (1) each
partner is a natural person, and (2) the partner’s share of income is
the same as his/her share of every other item. [Rev. Proc. 84-35]
Partnership K-1 Deadline: Partnership is
required to furnish Schedule K-1 to each partner by the due date,
including extensions, of the partnership tax return (Form 1065).
Partnership Income/Tax Rates: Profits and losses
are passed through to partners on Schedule K-1 and are taxed on the
individual partner’s tax return.
Limited Liability Companies (LLCs): Created
and regulated under state law, and are generally treated as partnerships
for tax purposes. LLCs generally have the same options as partnerships for
electing tax treatment.
Partnership Tax Matters Partner (TMP): Partnership’s
primary representative in dealings with the IRS. The partnership may
designate its own TMP by completing the requested information on page 2 of
Form 1065. The TMP must be a general partner, or in the case of an LLC,
must be a member-manager. If the partnership does not designate a TMP, the
IRS has the authority to appoint one.
